Self-hosted product - licence per server, per core, or per user? Every model annoys somebody

Went from flat per-instance to per managed node, meaning the things the tool looks after rather than the machine it runs on. That metric had three properties I now insist on: the customer can count it without asking me, it goes up when they get more value, and it does not change when they reorganise their infrastructure.

Per-core failed the third test badly. A customer virtualises, consolidates, or buys newer hardware with higher core counts and their bill moves for reasons that have nothing to do with what they got from me. That is the conversation that loses renewals.

The counter-argument for per-user, which is that IT buyers can forecast it. Headcount is in a spreadsheet somebody already maintains, so a per-user price can be budgeted a year ahead without anybody guessing at infrastructure growth.

The cautionary tale here is what happened when the big virtualisation vendor repackaged vSphere into subscription bundles with minimum purchase sizes. Plenty of small shops did not object to paying more in principle, they objected to an invoice that arrived several times larger with no change in what they were running, and a lot of them started evaluating alternatives that week. Surprise, unbudgeted true-ups do more damage than the price itself.

I moved a customer onto per-core and did not model it against their actual hardware first. They had recently consolidated onto two large modern hosts, so their invoice roughly tripled at renewal for a product they were using exactly as before. They churned, politely, and told me why. Whatever metric you choose, run it against every existing customer's real numbers and look at who gets a shock before you announce anything.

Pick the metric that grows with the value, then cap it. A ceiling on the annual increase, written into the licence, is what lets a buyer sign without imagining a scary invoice in year three.

On enforcement: think hard about how much you want to build. Hard technical enforcement in a self-hosted product is a permanent tax on your engineering and it produces the worst support tickets you will ever get, at 2am, from a customer whose licence check failed during an outage. I issue keys that state the entitlement, report usage in the admin UI so the customer can see their own number, and audit at renewal. Honesty plus visibility has cost me very little and saved a lot of code.

Numbers from my own change, because the distribution surprised me. Before: 61 customers, flat fee, top three by usage consumed about a third of my support hours and paid the same as everyone else. After moving to a usage-linked metric with three bands: revenue up roughly 40 percent with two customers lost, both of them from the smallest band who moved to a free alternative. My support hours per pound improved dramatically because the heavy users were finally paying for the weight.